REGISTERED NO..!4-:-]q?

L.-7@6
9
(MtcGp;dc d Dg[{dtur
EXTRAOROINARY
PUBLISHED BY AUTHORITY

ISLAMABAD, SATURDAY, DECEMBER 4, 202I

PAR I'I
Acts, Ordinatrccs, Presidcot's Ord.N and Regulations

NATIONAL ASSEMBLY SECRETARIAT

lsldnabad, the 3 l)ecenther, 2021

No. F. 22(30)r02Glcgis.-1 he following Act ol \lajlis-c-Shoora

(Parliament) receivcd rhe asscnt ofthe Presidenl on the
lst December,202l is
lrereb) publishcd fol gcn(ral informarion -

Acr No. XXXlll OF 2021

AN

ACl

to dntend the f i tucial Institution.\ (Sec ted ndnsadiotlt) At:t, 2016

WllrrRlAS it is expedicnt to anend the Financial llstitutions (Secured

Iiansactious) ct, 2016 (XXXI of 2016). for the purposes hcrcinafter appearirg;

It is hcreb]' cnactcd as follows:-

(e87)

Ptice. P,5. 10.00

II 727(2021 ),E\. Ca2.l.

9tE 'lllE GAZET]E OF PAKISI N, LX-lRA, DECEMBER 4,2021 [PaRr I

L Short title rnd commcnccmcnl < I ) This Act shall be called rhe
Financial Ins(itutrons (Secured Transactions) (Amendmeno Act, 2021

(2) It shall come into force at oncc

2. Ametrdment of section I, Act XXXI of 2016.-ln the Financial

Inslilurions (Secured Transactions) ncq 2016(XXXI of 2016), hcreinaftcr
rcfcncd to as the said Act, in section l, in sub secrion (3), for the words "Fcdcral
Covemrnent," the word "Commission" shall be substituted.

l. Amerdments ofsection 2, Acl X,(XI of20l6.-In thc said Acr. in

scction :, in sub-secriol (l),-

(a) after clause (i), the follolving new cleuse shall be inscflcd,

' 0a) "acquisition security inrerest' means a security interest in

tangible movable propcrty which secures an obligation to pay
any unpaid portion of thc purchase price of that poperty, or
other credit extended to enable the customer to acquire rights
in the p.operty to the exrent that the credit is used for that
Purpose;";

(b) in clause (ii), after thc E'ords "after-acquired", the words "and
fulure" shall be insertedt

(c) in claus€ (ix). after the word goods" the words "and producb"
shall be inserted;

(d) in clause (x), for thc cxprcssion -clause (7) of sub-section (l) of
section 2 ofthe Comparries Ordinance, 1984 (XLVII of l9t4)" the
expression "claus€ (17) of sub-section (l) of section 2 of rhe
Companies Act" shall be substitutedi

{e) after clause (x), amcnded as albrcsaid, the following new clauses
shall be inserted, namcly
-
"(xa) ''Companies Act" means rhc Companics Act, 2017 (XlX of
20t'7);

(xb) "Commission' shall have lhe same meaning as assigned to t

under clause (g) of sub-secrion (l) of section 2 of the
Securities and ExchanSe Commission of pakishn Act, 1997
(xlll of 1997); ;
PART IT THE GAZETTE O

(I) for clause (xx), thc following shall be substrtuted, namely:

"(Lx) "financing statement" means the prescribed form to be filed in

the register lor the purposes ofperfecting one or more security
interests,"l

(e) clause (xxi) shall be omittedr

(h) rn clause (xxii), for the expression 'Companies Ordinance, 1984

(XLVll of 1984)", the exprcssion 'Companies Act, 2017 (XIX of
2017)" shall be substituted;

(i) in clause (x-xiii), for the expression "Companies ordinance, 1984

(XLVII of 1984)". thc expresston "Companies Act,2017 (XIX of
2017)" shail be substituted:

0) clauses (L\iv) and (xxxiir) shall be omitted;

(k) for clause (xxxv), the following shall be substilutcd, namely:-

"(xrnu) "possessiofl of an electronic title documert by a person"

means the transfer of exclusive control of the electronic titlc
document to rhat person in accordance with the procedures
established by the system under which the electronic title
document is rssued;";

(l) in clause (xxxvi), th€ words "or regulations" shall be omitted;

(m) in clause (r\xvii). after the word and comma "exchange'', the word
"replacement" shall be inserted;

(n) in clause (xliii). in sub-clause (b), for lhe expression "Companies

Ordinance, l9E4 (XLvll of l9E4)", the expression "Companies
Act. 2017 (XIX of 2017)" shall be substitutedr

(o) for clause (xlvi), rhe following shall be substrtuted, namely:

"(xlvi) "secured cr€ditor" means a financial institution or a

consortium of financial inslitutions in whose favour a security
interest is created by the customer and in the case ofa security
interest that is an absolute assignment of r€ceivables, the
secured creditor is the assignce:''l

(p) for clause (xlviii), the following shall be substituted, namely:

990 TIIEGAZETTE OFPAKTSTAN. EX1'RA,, DF]CEMBER 4,2021 PARI I

"(xlviii) "security interesf' mcans.-

(a) a ri8ht, title, encumbrance or intcrcst of any kind upon

movabl€ property created or provided for by a security
agreement in relation to a transaction thar in substance
sccurcs thc paymcnl or p€rformajrce of a customer's
obligatior without rcgard to lhc form of the Eansaction
or the tcrmrnology uscd by the panics or the identity of
the person who has title lo the movable pmpen]-', and
includes any charSe, mort8age, hypo lecation, fixed
charge, floating charge, assiSnmenr, lien. pledge,
assignment of reccivables by way of security and
uansaclions undcr u'hich a secured crediror retains title
such as a financc lease, htre purchase agreement, sale
and lcasc back arrangemcnl, condilional sale agre€meDt
and ret€ntion ofritlc arrangement, having similar cffect;
and

(b) an absoluLe assigrment ofreceivables:":

(q) after clause (xlviii). substirutcd as aforeseid, thc following new

clause shall be inserted, namcly:-

"(xlviiia) "specified" means specified through regulatiofls made by the

Commissionf'l and

(r) for clause (li), lhc following shall be subsliluted, namely:-

..(li) "title documenl" means a docunrent in writing cvidencing tifle

to goods which is, by law or custom, transferable by delivery
(whether wilh or wilhout endorsemenl) or control and
includcs a bill o[ ladinS, dock warrant, warehouse receipt,
railway receipt, airway bill, truck receipts or similar rccord
issued by a person in the busiress of transporting or storing
goods;".

4. Ametrdment ofsec(ion 5, Act XXXI of 2016.-ln thc said Act, in

section 5, in clause (b), for the word ,.plcdge,,, lhc words ,.security interest that is
p€rfected by posscssion ofcollateral,, shall bc substitutcd.

. 5.
section 6.
Amendmcrts of se.lioE 6, Act XXXI of 20t6._tn rhe said Act, in

G) in.sub-section (2), for claulcs rb) and {c). rhe lollouing shall be
substituted. narnely:-
 THE GAZETTE Of PAKISTAN. EXTRA,. DDCEMBER 4.202I 99I

'(b) for all securiry inlerests other tlan an absolute assrgnment o[

receivablcs, thc obligations secured by the security interest, in
accordancc wrlh sub-section (3);

(c) a d€scriptiou of tho collateral in accordancc with sub-section

(3); and";

(b) after suFsection (2), amended as aforcsaid, thc lollowing new sub-
sections shall bc addcd, namclyl

"(3) The obhgations and the collateral may be described in the

security agreement in a manner that reasonably allows their
identificalior.

(4) A description of secured obligations that indicates that the

s€curily inlcrcst secures all obligations owed to rh€ secur€d
crcditor at any time or that states a marimum amount salisfies
the standard referred ro in sub-section (3).

(5) A dcscription of collateral that indicates that the collateral

consisls of all of the customer's movable property, or of all
the customcr's movable prope(y wilhin a Beneric category,
satisfies the standard refened to in sub-section (3).".

6. Amendmcdt ofsection t, Acl XXXI of2016. In tlle said Act, in

seclion 8. after the words sgoods", wherever occu.rinq. th€ words 'and products"
shall bc inserted

7. Ametrdment of sc{tion 9, Act XXXI of 2016. ..1n the said Acl" in

section 9, after the words " after-acquired', wherever occurring, the *ords '
and fulure" shall be inssled

8. Amendment o[ sc.tion 10, Act XXXI of 2016.- In the said Act,

iD scction 10,

(a) for the mardnal heading'Future l'inance", the marginal headrng

"Obligalions that may b€ serured' shall be substituted,

(b) cxistinS sub-scction (l), shall be re-numbcred as sub-section (lA)

and before that the followrng new sub-section shall be inserted,
namely:-

"(1) (lA). a securit) inlcrcst may secure one

Subject to sub-section
or morc obliSations of any typc, whcther monetary or
992 Tl{E GAZETIE OF PAKISTAN- I'-x IRA . DIIC},MBLR 4. 2021
^RT
I

non-monelarJ: presenl or fulurc, delermircd or determinable,

conditional or unconditional. or lixed or 0uctuating-'': and

(c) in sub-section (2), fo. the expressior ''pledge rnd a security rnrerest
in collateral covered by a title document created pursuant to secrion
11" the e\pression "securit) inlercst that is perfcctcd by posscssion
of the collateral or. in the case of collateral covered by a title
document, by Nssessron olthe title document" shall be substituted.

9. Substitution of section I4, Act xxxl of 2016. In the said Act,

for section 14, the followLng shall be substituted, namely:-

14. Perfection.-(l) A securit) interesl in movable propert.v tna) be

perfectcd by registration as provided undcrlhii Act.

(2) A security interest rn a right to payment oI funds credited in a

deposit account ma)/ also be perfected by conhol.

(3) A sccuritv inlerest in collateral covcrcd by a li1lc document may

also be perfected by possessjon ofthe tide documeut by the secured
creditor.

(,1) A securily interest in tangible movable propertl may also be

perfected by possession oflhe propeny by the secured creditor.

(a) Customer A (an entiq) entered into a securiB agreement over

shares wlth Secured Creditor B and delivered possession of
the share cerlificates to Secured Creditor B on the lst
December. A financing statemcnt \ras rcgistered in the
rcgistc n rcspect of the secur,lv rnterest on the 3rd
December. The securiry interest m the shares was perfected by
registration on thc 3rd Dcuember.

(b) Custorner C (an entity) created a security inter€st over all

preseDt and aRer-acquired irventory in lavour of Secured
Creditor D on the 1st J:rnuary. A financing statement was
registered in the register in respect oF the security interest on
the 3rd January. The securify interest was perfected by
registratron on the 3rd January.

(c) Customer N (aD e'rnry) cntcrs inlo an assiErmcnt agreement

with Secured Creditor M on the lst March pursuant to which
Customcr N assigns receivables under a supply agreement as
THE CAZETTE OI'PAKISTAN, EXTRA., DTCEMBER 4, 2O2I 993

security in favour Securcd Crediror M. A financing

of
statement was regislcr€d in the register in respect of lhe
assignment on the lrd March. The assignment ofreceivables
by way oI security was f,€rfected by registration on thc 3rd
March.

(d) Customer C (an entity) leases a car from Secured Crediror H

pursuant to a financc lcase agrcement on the lst Decemb€r.
Secured Crcditor H is registercd as the ow[er of the car. A
financing statement *as registered in rhe registcr in respect of
the finance lease on the 2nd Deccmber The linance lease was
perfecred by registralion on th€ 2nd December.

(e) CEtomer F (a company) created a sccuriry interest in a right

to palment of funds crcdited in a deposit account in favour of
Secured Crcditor G on the lstDec€mber. The deposit account
was maintained with the Depository Bank 11. A control
agreement was entercd into berween Customcr F. Secured
Creditor G and D€pository Ban-k H on the 2nd December. 'l he
security interest in a right to payrncnt of funds credited in a
deposit account was perfected by control on lhe 2nd
December.

(0 Custorner H (an entiry) created a securir)_ intercsr over all its

present and after-acquired movable prop€ny (including
tunds held in deposit accounts) in favour of Secured Creditor
P on the lsl March- A financinS statement in rcspect of $e
security inlcrcst was registered in the registcr on the 4th
March. 'l'hc h)?othecation was pe.fected by registration on
the 4th March- In this case, the securily interesl in a righr to
payment of funds crcdited in a dcposit account was also
perfected by registrrtion.

(g) Customcr M (a company) creatcd a securitv inrcrest over its

cquipment in favour of Secr.rred Crcditor N on the 5d April.
'l-he
secunty interest extended to any proceeds recerved from
the sale of the equipmcnt with rhc Creditor N.A financing
statement was regislcred in the companies'regisler of
mongagcs and charges on the loth April in respect of the
securiry intcrest. The securir, interest was perlected by
registralion on the loth April. The Secured Crediror N
authorized in writing lhc sale of thc equipment by Customer
M on the 5th May which resulted in Custorner M receiving a
cheque o[ one hundred thousand rupees in the form of
proce€ds arising from the sale ofsuch equipment. In this case,
994 T]IE GAZETTE OF PAKISTAN. I.]X tRA., DECEMBER 4, 2O2I [PART I

Secured Crcditor N's sccurity interest in the cheque of onc

hundred thousand rup(cs (a negoliable instrument) rvas also
perfecled b) regisrrari^n on the .Oth Aprrl. .

10. Amcndmetrls o[ sectiotr 15. Act XXxl of 2016.- In lhe said Act,
in section li.-
(a) after the words " alier-acquired", wherever occurrlng, the words
" and future' shall be inse(ed: and

(b) after the words "goods , wherever occurri g. thc words "and
products" shall hc ins€rtcd

ll. Amcodmert of s€ctior t8. Act )O(xI of 2015.- ln the said Acl,
in scction 18, in suFsection (2), Ior thc cxprcssion "Comparies Ordinance, l9E4
(XLVll of 1984)", the expression ''Cornpanies Acl. 201? (XIX of 2017)" shall bc
substituted.

12. Amcndmenb of scrtior 19, Act XXXI of 20r6.- In the said AcI,
in section19.-
(a) in sub-sectron (2), for thc \ords 'Fedcral Goyemment', the *ord
''Commission shall be substituredi

(b) for sub-section (3), the foilowing sball be substitutcd, namelyr-

'(3) The head office ofrhc Regisrry shall be at such place as the
Commission may specil-v and. il- considercd necessary, the
Registry may establish branch olRces of the Rcgistry at such
other places as the Commission deems fit for lhc purposes of
facilitating regishation ol securiry interests crcated by an
entity and 1o perfonn any or all of the functions of lhe
Registry, as may bc dclcrmined b), the Commrssion.":

lc) in sub-section (4), for the *ords _Federal Govemmcnt , thc *ord
-'Commission" shall be substituted: and

(d) in sub-section (5), after thc \vord "seal '. rhe words 'as approved by
the Commrssion" shall be insencd

13. AmerdmeDt of section 20, Act XXXI of 2016.- ln the said Act.
for scction 20, the followrng shall be substituted namcly:-

"20. Appoinhent of r€is(rsr, deput] registrars rdd other

ofliccrs.-(1) The Commissior may empower or appoint any
P^RT Ii THE GAZETTE OF PAKTS,TAN, F-XTRA,, DECEMBER 4,202I 995

officer of the Commission as tho head of the Regisrry for the

purposes ofmanatsing and controlling thc register ser up pursuant to
section 2l and such other firnctions as may bc detcrmined by lhe
Commission-

(2) The Commission may also appoint dcputy registars for each
branch omce ofthe Rcgistry to perform, under rhe direction ofrhe
regisfar, such functions, duhes and po\r,ers of the regislrar under
this Acl as ma) hc notified b)'the C.rmrnissron.

(3) The Commission may appoint such other officers with such
designations as it may think fit for ths purposes of this Acr, to
perform under rhe diroclion of the regisrar, such functions, dutics
and powers undcr this Act ?rs may be determined by the
Commrssion.".

14. ADeodment of section 21, Act XXXI of 2016.-In the said Act,
in section 2l--
(a) in sub-section (l), the words "at th€ head office ofthe Registry"
shall be omnted: and

(b) in sub-section (3), clausc (b) shall b€ omirtcd; and

(c, in sub-section (4),-

(i) for thc word "registrar", the word "Commrssion'' shall bc
substituted:and

(ii) for the word "prescribc" the word 'specify" shall be

substiluted.

I 5. Amendments of section 22, Act XXXI of 2016,-ln Lhe said Act,

in section 22, ir sub-section (2),-
(a) clause (a) shall bc omi(ed:

(b) after clausc (b),'the following nelv clause shall be inserted,

nallrelY:-

"(ba) in the case ofany other entity, as may be specificd;" and

(d) for clause (c), the following shall be substituted, namely:-

996 TI{E GAZETTE OF PAKISTAN, EX IRA-, DECEMBER 4,2O2I [PART I

''(c) the vehicle regislralion number m case ofa rnolor vehicle for
which the vehiclc registration numbe. is given in the financing
slatement:and-_.

16- Amcndments ofseltion 23, Act XXXI of 2016.- tn the said Act,
in scrtion 21.-
(a) in suusection (2),-
(i) the words "be in such form as may be prescribed by rules
end" shall be omitted: and

(ii) for clause (0, thc following shall be substituted, namcly:-

"(0 term ofthe rcgistrarion up lo a ma-\imum offive years:";

(iiD for clausc (g), the following shall b€ substituted, namely:-

_'(g) maximum amount secured by the securit-"- interest unless
the financrng statemenl relates to an absolute transfer of
receivables; and";

(iv) for clausc (h), the follorving shall be substituted, namely:-

''(h) description ol' the collateral and its proceeds, \r'here

applicable:

Provided that a description of collaleral is

su{Ticient if it reasonably allows its identification. A
description of collateral that is a motor vehicle may, but
need nol include ils \ehicle registmlion number.': and

(v) clause (i) shallbe om'ttcd

(b) for sub-section (3), the following shall b! substituled, namely:-

'(3) A financing statcment may b€ filed bcfore a security

agreement is entered into and a financing statement may
perfect sccurity interesrs c.cared by more than one security
egre€ments.": and

(o after suLsecrion (3), subsriluted as aforcsaid, rhe foltowing new

suLsection shall be added, namely:-
PA]{ I II TTITJ CAZETTE OF PAKISTAN, EXTRA., DECEMBER 4 202t 997

"(4.) A financing slatement is only effective if i( has bcen

authorizcd in \rriting by the entity and an cntity shall be
deemed 1o have authorized the registration of a financing
statement that describes collatcral if the entity enters into a
security agreement that covers rhat collateral-".

17. Amcndments o[ sectiotr 24, Act XXXI of2016. In the said Act.
in scclion 24,-
(a) in sub-seclion (l), in clausc (i), rhe word -or", at (he end, shall b€
omitted and lhcrcafter thc following new clause shall be insertcd,
namely:-

''(ia) extension of the term of the registration, in accordance with

suLsection (2A); or";

(b) in sub-section (2), the words "bc in such form as may be prescribed
by rules and" shall be omilled;

(c) after suEsection (2), amended as aforesaid, the following new sub-
section shall be inserted, namely:-
'(2,\) lhe term of a registration may for a maximum penod of five
years from its exprry be e ended at any tim€ within six
months before the then-current expiry dale by 6ling a
modificalron statement to thal effeff. The term of a
registration may b€ extended in this way more than once.".

18. Omission of section 25, Act XXXI of 2016. ln the said AcL
scction 25 shall be omitted.

19. Amendment of section 26, Act XXXI of 2016.- In the said Act,
in scction 26, in sub-section (2), the words "be in such [orm as may be presc bed
bv rulcs and" shall be omined

20. Alncndd€nt of sectiotr 28, Act XXXI of 2016.-ln the said Act,
rn section 2E, for the marginal heading "Rejection of filing", rhe marginal
heading "Incomplele filings" slrall be substituted.

2l. Amcndmert of sectior 30, Act XXXI of 2016.- ln the said Acr,
in section 10,-
(a) in suFsection (l).-
(r) for clause (a), the following shall be substituted, namely:-
998 TIIE GAZEI.].E OF PAKISTAN. EXTRA, DECEMBER 4. ]021 IPART I

"(a) particulars ofan cnlrty under clause (a) (for entiries othcr
than natural persons) or (d) (for natural pcrsons) ofsub
section (2) ofs€cuon 2l are slated incorrectl-"_ such that a
search of the rcgister using lhe correct paniculars would
not retrieve th€ rcBistered financing statement;";

(ii) in clause (b),-

(l) the words "such that a search of thc register would not
reveal thc same collateral,'' shall be omittcdi and

(Il) after the semicolon at the cnd. the word " or'' shall be
insened:

( iii) clausc (c) shall be omitted; and

(iv) for clause (d). the following shall be substituted, namelyi-

''(d) the entit-v has not authorized the Iiling of a financing

statement-": and

(b) in sub-section (2).-

(i) for the expressio; "clause (e) or (g) as requircd". the
expression ''clause (e) for entities olher than natural persons
or (g) for naturalpersons" shall bc substituted; and

(ii) the words "by the enliLv'shall be omitted

22. AmendmeDls ofscction 31, Act XXXI of 2016.- ln the said Act,
in sertior 11. rn \uFscction ( l).-
(a) in clause (a).-
(i) in sub-clause (i), lor thc word "lhe'occurflng for thc second
timc the word "a" shall be substituted: and

rii) in sub-clause (iv)- for the word 'a', the word ''the" shall be
substituted; and

(b) in clausc (b), in sub-clausc (ii) the cxpression 'as required under
sub-section (l) of seclion23' shall be omitted.

2:1. .{mendment of scctiotr 32, Act XXXI of 20l6.-tn the said Act.
in seclion J2, for suuscction
( l). fie follo$ing shall be substilulcd. namely:-
pARrtl THEGAIEItEOI PAKISTAN. F-XTRA, DECEMBER 4, 2021 999

"( l) A registered financing statement and any modification statcmenls in

relation thereto shall be removed from thc rcgistcr, ii-

(a) the tenn of the registration has expired without being

extended under sub-section (2A) ofsection 24; or

(b) a tcrminalion skrement has been lllcd in lhe rcgistcr in rcspect

of such regislered financing slatemenL.".

24. Amendm€nt of seclion 33, Ac1 XXXI of 2016.- In the said Act,
in section33.-
(a) in sub section (2),-
(i) clause (a) shalt be omitted;

(ii) after clause (b). the lollowrng new clause shall be iDsened,
namely:

_(ba) in case of any othe. entiry, agaiDst the name of the

enrity, as may be prescribed;"; and

(iii) in clause (e), fbr the word "prescnbed'-. the word "specified"
shall be substitutedi and

(b) in sub-sectior (3), for the words'-prescribed b)'rules-, the word

''specified" shall be substituted.

25. Amendment of scctior 34, Acl XXXI ot 2016,- ln rhe said Act,
in seclron 34. for the expression "Federal Govcmmcnt". the \\ord "Commissioh"
shall be substituted.

26. Am€trdment of section 38, Act XXXI of 2016.- In the said Act,
18,-
in section

(a) after thc words ''aftcr-acquired", occurring flvice. rhe words 'and
future'' shall be inserled; and

(b) after the rvord ''present", thc u,ord "prope.ry" shall be inseded

27. Amcndmcnt of scction 39, Act XXXI of 2016.-ln the said Act,
in scction 39, for sub-section ( l), the following shall be substituted. namelyi-

'(l) statement or Forrn l0 is required to state a maximum

If a financing
amount sccured, then the priority of a sccurity rnterest that is
1000 TI{E CAZETTE OF PA(ISTAN. EXlR .. DECEMBER 4,2021 [PaRr I

perfected by that financrng starement or Form I0 is limi(cd to lhc

ma\imum amount as stated in the rcgistered financing statement or
Form 10, as applicable.".

2E. Amendment oIs€ction 42, Act XXXI of2016. ln the said nct.
in sccti,)n 42.-
(a) for the margioal heading "Priority of security inter€sl b93cd on
r€t€ntion of title arrengement", thc marginal heading " Priority
otacquisitiotr s€curity intcrcsl" shall be substituted;

(b) for sub-section (l). rhe following shall be substituted. namcly:-

_(l) An acquisition securit! inrerest in collareral rhal is pcrfcctcd

by registration as provided under this Act $ithin ten days ot
the date on which lhc customer takes possession of the
collateral shall have priority ovcr all other comp€ting security
interests in the sirmc collateral irrespective of the time of
perfection of such competing security inlerests-',

(c) sub sectron (2) shall be omitted;and

(d) in the ILLUSTR 4T|ONS, in lhe first paragraph. for the words
"h]pothecation on all present an", the words ''a security interest
ovcr allpresent and'' shall be substituted.

29. Amendment of secliotr {5, Acl XXXI of 2016.-ln thc said Acl,
in section46,-
(a) in sub-section (l), th€ expression 'pursuant to s b-section (l) ot
section 14" shall be omitted, and

(b) after sub-section (3), in thc II,I,IJSTRATIONS,-

(i) in clause (a). in thc second paragraph, for the word

"hypothecation''. the words "securio' inlerest" shall bc
substituted: and

(ri) in clause (b)- for thc lvords "floating chargc". \r'herever

occurring. the words "sccurit-y interest" shall be substituted.

30. AmcEdmetrt of sectiotr 47, Act XXXI of 2016.-In the said Act.
altcr sccLitrn 4i. it the illustrotion in the second paragraph. for th€ word
"hlpothccalion". th€ words'-security inlcrcst'shall b€ subshtuted.
P^RT I] THEGAZETTEOF PAKISTAN. EX.IRA., DECEMBER 4,202I IOOI

Jt. Omissiotr of sectiotr 48, Act XXXI of 2016.-ln thc said Act
section 48 shall be omitted.

32- Amendmenl of section 49, Act )O(XI of 2016.-ln the said Act.
in seclion 49,-
(a) in sub-section (l), the expression 'pu.suant to sub-section (3) ol'
secl;()n l4" shall be omitted; and

(h) ill8lratio -
after sub-section, inthc

(i) in clausc (a), in the second paragmph. for the word

"h]?othccaion", the words "scc(rity interest" shall bc
substitulcd: and

(ii) in clausc (b), in the founh paragraph. for the words "floating
charge" wherever occurring. the words securily intercst"
shall be subnituled.

33 AmcDdmenl of s€ction 50, Act X)GI of 2016.-ln thc said Act,

in section 50,-
(a) after sub-section (l), the following new sub-section shall bc
inse(ed, name ly:-
"( tA) A purchaser for value of a molor vehiclc shall acquire the
motor vchicle free ofa security inlerest ifthe security interesr
is perfccrcd b'registralion and the registration does not
rnclude the correct vehicle rcgistrahon number."; and

(b) in sub-section (2), after the expression "sub-sectron (l)'_, rhe

expression "or under sub section (lA)" \hall bc inserted.

1,1. ltrscrtion of sectior 52A, Act XXXI of 2016.-ln the said Act.
namely:-
after section 52, thc following new scction shall be inserted,

.,52A
Trrnsferee of mon€y.-A person that obEins posljession ofmoney
that is subjccl lo a sccurity interest acquircs its rights in the mon€y
frcc ofthe sccurity interest, unlcss the pcrson had acrual knowlcdgc
that its ohrarning the money is prohibited under lhc sccurit)
agreenrent.".

35. Amendment of section 53, Act )O(XI of 2016.-ln the said Act.
iI section 53,-
1OO2 TIIE GAZE]-TE OI PAKISTAN, EXTRA,, DECEMBER 4. 2O2I lP^xr I

(a) for sub-section (l), the following shall be substrtulcd, namelyr-

''(l) lhis Acl shall apply to an assiSnment of rcceivables as a

security interest- whercby-

(a) a customer may assign its rights, title, interests and

bencfits in receivablcs lo a securcd creditor in
accordance with Part Il ofthis Actl

(b) the sccured credilor may pedect the sccurity intcrcst

created by the assignmenl,-

(i) ifthe customer is an entity, in accordance with Pan

III of fiis Act- or

(ii) if the customer is a company, in accordance with

th€ Companies Ac! 2017 (XIX of 2017):

(c) the priority of rhe securcd credi(or's interest in the

receivables shail be determincd in accordance with Part
V oflhis Actl and

(d) the secured creditor must enforc€ its securiry intcrcsl,

unless it rs an absolute assignment of a receivable, in
accordance $rth Pan VII otlhis Act. :

(b) sub-section (2) shall be omitted

(c) . in sub-section (3),-

(i) for the expressions l]pon an assignment ofreceivables under

sub-section (l) , the expression "Subject to this Act, upon an
assignmcnt of rcceivables' shall be subshlutcd;

(ir) in clause (a),-

(l) fo. the word "assignor", thc word "customei' shall be
substituted; and

(lD for the word "assrgnee", the words "sccured credilor"

shall be substilutcd.

{iii) in clause (b),-

 PATT I] THE GAZETTE OF PAKISTAN, EXTRA, DECEMRER 4,202I 1OO3

(l) for the word 'assigne€", the words "secured cr€ditor"

shall be substituted;

(ll) for the wo.d "his", the word ''its" shall be substitured;
and

(lll) for the word "assignor's". the word "cusromer's" shall

be substituted.

(d) sub seclron (4) shall be omitled;

(e) for sub-section (5). the following shall be substituted, namcly:-

'(5) lI rc.ceirablcs subject to a security imercsl are sccured by

movable property, then, unless olherwise agreed between the
customer and the secured creditor. the sccured creditor shall
automatically benefil from that sccurity wirhout the need for
any nelr acl oftransfer,";

(f) for suEsection (6), the following shall be substituled. namcly:-

'(6) 'lhe rights of a secured creditor in resp€ct of the receiyables

that are subjcct to a security interest are subject 1{]-
(a) all defcnces and right to set-off arising from rhc onginal
contract between the account debtor and the customer
that the account debtor could have assefted against the
customer:

Provided fiat the securcd creditor shall. unless

otherwise agreed with the cuslomcr, b€ €ntitled ro
recovcr from the customer, any loss suffbred by it as a
result ofthe account debtor cxercising any such defenc€s
and right to set-ofT; and

(b) an), r'ghts to ser-off that thc accounl debtor could have
asserted against thc customer in respect ofclaims against
the cuslomer accruing beforc the account d€btor received
ootice in rvriting ofrhe s€curity intercst;"1 and

(g) in suLscction (7), for the word "assignoc' the word "cuslomer"
shall be substituted.

36 Omission of s€ctior 54, Act XXXI of 2016.-In the said Act,

section 54 shall be omitted.
IOO4 THE GAZI]TTE OF PAKISI.AN. LXI.RA., DECEMBER .'. 2O2I IPART I

37. Substitution of section 55, Act XXXI of 2016.- ln the said Act.
Ior secrion 55, thc tollowing shall be subslituted, namely:-

Protcctions for the account d€btor.- (l) Subject to sub-section

(4), an account debtor shall bc bound by a securily inlcrcst over the
receivables and have a duty to make pa]rncnl lo the secured
creditor whcre thc account debtor receives norice of securrv
inleresl in writing.

(2) The notice to be givcn undcr suusection (l) to lhe account debtor
may be given by the custorner or secured creditor and shall at thc
minimum-

(a) sble name and address of rhe customer:

(b) state name and addrcss ol the secured cfi:ditor;

(c) identiry the r€ceivablcsi and

(d) require the account debtor to pa-v to thc sccured creditor in

accordance wilh payment instructions stated therein

(3) tfloticc has not been givcn to an account deblor under suFsection
(l), ofa security interest in rcccivables, he shall be enlitled to make
payments to the cuslomcr in respect of thc receivables in
accordance with the original contract b€tw€en lhc account debtor
and the customer and such pqment shall fully discharge thc
accounr debtor:

Provided that pavmcnt made to the cuslomer in respect of

such rccervables shall bc hcld in trust for the benefit of the secured
creditor and the customer shall forthwitl makc payment of such
amount to the secured creditor or its agent duly authorised in this
bchalf, unless otherwise agreed between the customer and secured
crcditor.

(4) II an account debtor rcccivcs notic€s under sub-sccrion (l) in

relation to more than onc sccuriry interest created by the same
customer, it is discharged by paying in accordance uith thc first
notice received. Ifan account debtor receives tnore than one notice
under sub section (l) in rclation to security intcrosts creared in
[arour of a secured cr(dit,,r by the inrrral ,,r anr orher secured
creditor, il is discharged l)), paving in accordancc rith the Iast
notice.".
PAR'T I] THI GAZETTE OF PAKISTAN. EXTRA,, DECEMBER {,202I IOO5

3E. Insertior of section 55A, Act XXXI of 2016.-ln the said Act,
after scction 55. substituted as aforesaid. thc following new section shall be
insertcd, namely:-

"55A Cotrtracturl limitetioDs on sec riq intcrests in rec€ivsbles.-

(l) A sccurit] interest in rcceivablcs shall be effective
nolwithslanding aDy agrccmenl between tie rnitial or any
subsequent assignor and rhc account debtor or iiny securcd crEditor
linrtrng in any way lhe assignor's right to creare a security right.

(2) Nothing in this scction affects an), obligalion or liability of the

customer lor breach ofthe agreemenl rel'errcd to in sub-section ( l),
but the olher party to rhe ageemcnt may not avoid the contmct
giving risc to the receivable or &c securily agrcement on rhe sole
gound ol lhe breach of the agreemcnt, or raise against the secured
crcditor any claim it mav have as a rcsult of such a breach against
thc cuslomcr. A person lhal is not a party to the agreemenl referred
to in sub-section (l) is nol liable for the cuslomer's breach ofthe
agreement on thc sole eround that it had knorvledge of rhe
aSreement.

(3) This section shall appll only to reccivables-

(a) arising from a cont.act thal is a contract for the supply or lease
of Soods or
senicos other than financial services, a
constsuction contracr or a contmct lor the sale or leLse of
immovable propeo:

(b) arising frorrr a conlract lor the sale. lease or licence of

industrial or olher intellectual property or of proprietary
informationi

(c) reprcscntinS dre palmenl obhgation for a credil card

transaction; or

(d) arising upon net selllcmenl of palments due pursuaflt to a

nettinS agreement involving more than two parties ".

39. Insertiotr of seclions 56.{ ond 568, Act X)ofl of 2016.- In thc
said Act, after section 56, the following new sections shall be rnserted, namely
-
Applicablc hs
"56A. -The law applicable to the crcation, pertlction
and priority of a sccurity intercst grantcd by a customer in a
receivable and any other intangible property shall be rhe law ofth€
jurisdiction )n r{hrch the customer ir locateo.
1006 tHE GAZEI'I E OI- PAKISTA^-. EXTRA., DECEMBE R .1. 2021 [P^Rr I

56B.-Pan docs not appl!' lo &bsolute assigtrDetrts of

receivables.- l his Part doesrot apply lo 6n absolute assignment
of receivables and nolhing in this Ac1 shall prejudice a securcd
creditor's righl to enlorce an absolute assignnrent of rccclvablcs
without the inlcrvcntiin) o[lhc courts.'.

40. Amendmcnts ofscction 59, Act XXXI of 2016.-ln the said Act.
in sccrion 59.-

(a) in sub-sectiur ( l), for clause (a). rhe l'ollowing shall b€ substitutcd,
DarnelY:-

'_(a) a security interest that is perlected by posscssioni ; and

(b) in sub-section (2), for the *ord "pledge', thc cxprcssion " security
intercst refered to in sub section ( l)' shall bc srbstituted.

41. Ametrdm€nls ofseclior 61, Act XXXI of 2016.-ln the said Act.
61.-
in section

(a) for the e\pression Cornpanies Ordinancc. l9E4 (XLVtl of I984)".

wherever occuning, rhe exprcssion "Companics Acr, 2017 (xIX of
1017)" shall be substitutedl and

(b) tbr the words "plod8c of the lvords'security interest over" shall
be substituted.

42. ,lmendments of scc(ion 63, Acl XXXI of 2016.-ln the said Act.
63,-
in section

(a) rn thc marginal hcading. for the word pledge' the words
''possessory sccurity rntcresa' shall be substituted; and

(h) in the tcxt ofthe section. for the words "pledgc or a security interest
ln collateral co\rered Lly a titlc documcnl", lhc cxprcssion "securily
interest thaL is pcrfected bv possession ofthe collateml or. in the
case olcollalcral co!orcd b\ a tille document. by possession ofthc
tille documena shall he subsritutcd-

43. insertioo of sectio[ 65A, Act XXXI of 2016.-ln fie said Act,
after section 65, the fotlowing new section shall be inse(cd, namely:-
_65A.-security interests takc precedcncc.-subject
to this Act
aod notwithstandir)g any other law for the time being in force, a
PAnT I TI{E GAZETTE OF PAKISTAN. EXTRA,. DECEMBER 4. 2O2I IOOT

perfected securiry interest takes absolule precedence over all odrer

claims. r'clllding rhose of rhe Governrenr.'.

,14. Substitution ofsection 66, Act XXXI ot20l6,- In the saidAcl.

lor scction 66, thc aollowinS shall be substituted, namely:

"66. Provisions of insolvcEcy laws.-Subject to section 65A, if a

customer becomes insolvent, the same rules shall prevail and be
observed lvith rcgard to thc priority of debts upon the distribution
of the insolvcnt customer's cstatc, thc rcspcctivc rights of the
' securcd and unsccured creditors and to debls provable as are rn
force lor the time being undcr thc applicablc insolvency laws.".

45. Amcndmcnt of section 68, Act XXXI of 2016.-ln the said Act,
in section 68, for the expression ''Companies Ordinancc, I984 (XLVll of 1984)"
thc exprcssion "Companies Acq 2017 (XlX of20l7)" shall be substitutcd.

46. Amendment of section 70, Act XXXI of 2016-In the said Act.
in section 70, sub-section (2) shall be omitted

,17. Substitu(ion of seclion 72, Act XXXI of 2016.-ln the said Act,
for seclion 72, the iol]orvinB shall he substituted. namely:-

"72. Power to make r€guletiotrs.-The Commission may, by

notificalion in'lhc olficial Gazettc, make rcgulations, not
inconsistent with the prolisions of this Act and the rules made
thereunder for carrying out the purposes ofthis Act.".

48.
Amendmcnt of scctiotr 73, Act XXXI of 2016.-ln the said Act,
in secrion 73, in sub-section ( l), in clause (c).-

(a) for the word "establishment-', the words "operalionalization" shall

be substitulcd; and

(b) for thc cxprcssion "Federal Goyemment in terns of sub-section

(l)'' the expression "Commission in tems oisub section (2)" shall
be substituted.

TAHIR HUSSAIN,
Secretary.

I'RI\TFD BY IIII- N{ANAGLR PR INI II\G OF PA

O]\'IROLf,EN SIATIOIIRY Ar\D IOfu\lS, LN]ITRSITY ROAD, (ATACI{I
'ORR)R^TION